Elron reports shrinking income, mounting losses for the second quarter

Elron Electronic Industries (Nasdaq, TASE:ELRN) yesterday reported shrinking income and mounting losses for the second quarter of 2002.

It quarterly loss climbed to $15.2 million, or 59 cents per share, compared with a loss of $7.5 million in the previous quarter. For the parallel quarter Elron reported losing $11.1 million, or 52 cents per share.

The company, which is controlled by Discount Investment Corporation (TASE:DISI), carries out most of its activities through two subsidiaries Elron Software and Elron Telesoft. Their combined income was $5.8 million in the last quarter, almost the same as in the first quarter but down 43% from the parallel three months of 2001.

Elron Software was responsible for $2.4 million revenues, up 26% from the first quarter. its proforma operating loss was $1.4 million, better than the $2.2 million posted for the first quarter and the $1.7 million in the parallel.

For the second quarter running, Elron Telesoft broke even, compared with an operating loss of $1.6 million in the parallel quarter.

Elron holds 50% of the Internet service provider NetVision, which reported netting $1.4 million for the second quarter, a hair down from the previous quarter but better than its parallel performance, when it lost a net $2.7 million.

During the second quarter Elron completed its merger with Elbit (Nasdaq:ELBT), hence its second quarter statement is consolidated with the results of six other subsidiaries. At the bottom line, the consolidation cost Elron $2.5 million in one-time charges.

Elron also posted a one-time charge of $2 million on reorganization, of which half a million is due to its union with Elbit. Elron said it expects the merger to reduce its operating costs, as it unifies the two headquarters.

The merger also brought Elron a 12.4% indirect stake in Partner Communications (Nasdaq, TASE:PTNR, LSE:PCCD). Its stake was worth $93 million at the end of the second quarter.

Elron ended the second quarter with $114 million cash and equivalents, down $4 million from the first quarter.